Category

bond market

Bonds

A Huge "Bond Bomb" Is Set to Explode – Here's What You Need to Know

There's a $400 billion bond bomb waiting for a light… and market volatility could be what sets it off.

Here's what to watch for - and how to protect your money...

Bonds

Here's Why High-Yield Bonds Are Much Riskier Than Most Investors Realize

This method of measuring risk on high-yield bonds isn't just wrong – it ensures investors a bad outcome.

Find out why (and how to avoid this trap) here...

Bonds

Why Investors Are Buying Negative-Yield Bonds

Negative-yield bonds are the next crazy result in a global economy turned upside-down by central banks.

Here's how these bonds work and why some investors are buying them...

Bonds

This Looks Like the Setup for a Bond Bloodbath

More than $12 trillion of global debt is now in negative-yielding territory – a move directly at odds with the argument that the global economy is healthy.

The same is true of the drop in U.S. Treasury yields. Real per capita GDP has risen by a mere 1.3% annualized since 2009. Is it any wonder that yields have plunged and the Treasury curve is flattening?

While I expect the market to recognize the truth about inflation sooner or later, there is every possibility that yields will move lower before they move higher due to tepid growth and a flight to safety in the event of a sharp market sell-off (as we saw after Brexit).

Analyst Christopher Wood, I think, said it best: "[T]he fact remains that the intensifying global move into negative bond yields this year is plain scary…But what is also scary about the gathering lurch into negative territory…is that it is the sort of parabolic move or 'spike' which to technical analysts often signals the approaching end of a long trend."

A little more than a year ago, we saw a sharp reversal in German 10-year bund yields when they dropped to around 10 basis points and then spiked to around 1%, leaving traders nursing sharp losses. Post-Brexit, 10-year bunds are trading at negative yields, pushed lower by flight-to-safety buying and expectations that the European Central Bank will continue to monetize the economically moribund region's debt.

This looks like the setup for a bond bloodbath.

Unfortunately, some investors are walking right into the crossfire...

Bonds

Rich or Poor, You Can’t Ignore U.S. Treasuries in Today’s Markets

There are a good number of investors who believe that U.S. Treasuries – notes in particular – are bad for you and even worse for your money at the moment.

Why really doesn't matter… rates might rise, deflation, a bond market bubble, there's too much debt… they're riskier than you think, goes the argument.

All of those things are, well… true. Yet, I submit U.S. Treasuries are the one investment you cannot afford to be without at the moment for three reasons.

So grab a cup of joe and let me share something with you that escapes 99% of all investors.

Bonds

How to Get Aggressive and Profit from the Junk Bond Market Crash

You've just got to love the junk bond market. It's sent stocks on a nice year-end rally for us, and the profits have been sweet.

But don't fall in love with those stocks at these highs. The "help" they're getting from high-yield debt isn't going to last.

In fact, I believe the lull in the junk bond market is going to end in the first quarter of 2016. And I think the ugly sell-off will resume, and that storm is going to take stocks all the way back to their August 2015 lows – and possibly a lot lower.

A lot of people could lose big – well into the double digits – but I'm not worried at all. And when you see the perfect trade I'm about to show you, you'll be ready for the sell-off, too.

Now, this is a bold trade for sure, but it's an easy one, with limited downside risk. And even better, it will let us clean up when the carnage hits next quarter...

Bond Market

How to Play the Bond Market Crash

The bond market crash in Europe is inevitable, which means that banks and financial institutions will tumble too. There's not a better opportunity to make money short-selling.

You could walk away with a bundles of cash.

Here's how to play the falling bond prices overseas...

Global Economy

Bond-Buying Chaos Is Spinning Out of Control

A few weeks ago, the man formerly known as the Bond King, Bill Gross, tweeted that shorting German bunds would be the trade of the century.

I was gratified to see that he was reading my mind, as readers of my Credit Strategist newsletter already know.

As a result of a massive bond-buying program by the European Central Bank (ECB), the yields not only on German bunds but on all European debt had plunged to ridiculously low levels.

Here's what you need to know...

Bond Market

Warning: High-Risk "Junk" Bond Squeeze Headed for Oil Market

High-risk junk bonds finance large portions of the energy markets. According to the latest estimates, energy-related issuances now account for almost 15% of the total $1.4 trillion junk-bond market.

That's about $210 billion in high-risk debt.

But recent credit rating downgrades could put oil companies and bond investors in a squeeze...

The Fed

Why Interest Rates Matter… and What Happens When Markets Diverge

In my last column, I explained why you should always keep the bond market in mind, because stocks and bonds are inextricably interconnected.

They're inextricably interconnected because interest rates matter.

When expected relationships between stocks and bonds (interest rates) diverge, it's important to take notice and consider what it could portend for both stocks and bonds.

Here’s why the current market divergence has a lot of analysts worried…